What is open banking?

Wouldn’t it be nice in theory to log into one website, or open one app on your mobile phone, and see all of your accounts – your credit card, bank account and savings – in one place?

Open banking is the idea that UK banks will have to shift from being one-stop-shops for financial services to open platforms where consumers can start to embrace a more “modular” approach to banking.

From January 2018, that should be possible, thanks to a new initiative called ‘open banking’.

A new set of rules are being introduced across the European Union, that require banks, building societies and other financial providers to let customers easily and securely share their financial data, including transaction history and spending behaviour with other banks and regulated third-party providers.

The new rules state that banks must create open APIs so that customer data can be shared between organisations and be incorporated into third party applications in a common, consistent format.

The first stage will be open APIs for what the CMA calls product and reference data. This will allow developers to create price comparison services, or include ATM locations on their maps, for example.

This is something of a test run for the more confidential customer transaction data being opened up by January 2018. This data will allow developers to securely view things like transaction history when applying for a mortgage, or to alert users that they are at risk of becoming overdrawn, for example.

It covers all payments accounts, including current accounts, flexible savings accounts, e-money accounts and credit cards – assuming you can manage all of these products online or via a smartphone app.

Furthermore, the Competition and Markets Authority is forcing the nine largest current account providers (Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group, Santander) to open up their customers’ transaction data, if they give them permission to do so.

Banks must be ready to do this by 13 January 2018

How will banks share my data through open banking?

Banks will be able to share customer data by publishing what’s known as ‘open APIs’ or application programming interfaces.

This technology is already used by many well-known companies to provide integrated digital services

Do I have to share my banking data?

No, if you don’t want to share your data, you don’t have to. Third-party providers will need your explicit permission before they access your data through open APIs.

That means you don’t have to opt-out – if you do nothing, your data will not be shared without your consent.

The Open Banking Implementation Entity

This was created by the UK’s Competition and Markets Authority to create software standards and industry guidelines that drive competition and innovation in UK retail banking.

"Totalinvestor are not authorised to give financial advice and we are not liable for any financial advice provided by, or obtained through a third party. Everything published on this website is for information purposes only. Totalinvestor is a trading name of Techomedia Ltd | Reg Number: 6501349S | Springpark House, Basing View, Basingstoke, Hants, RG21 4HG | Data Protection Number: ZA231503"